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According to a report released by two software piracy interest groups on Wednesday, of the $107 billion in software that was installed on computers worldwide in 2003, only $68 billion was paid for.

The Global Software Piracy Study — which was conducted for the first time by analytics firm International Data Corp. (IDC) for the Canadian Alliance Against Software Theft (CAAST) and the Business Software Alliance (BSA) — found that 35 per cent of software applications in Canada were pirated in 2003, a rate that is 13 per cent higher than that in the U.S.

CAAST is a “watchdog” organization — its member list is comprised of various software manufacturers — whose mission is to reduce software piracy. The BSA, which operates in 65 countries around the world, aims to combat piracy through education, enforcement and policy campaigns.

IDC was brought in to conduct the survey this year to help CAAST and BSA find a way to change the methodology they have used with past piracy studies, explained Alex Manfrediz, IDC program director, global projects. He added that CAAST and BSA were looking to concentrate on a bigger piece of the market.

IDC is looking at all PC software, whereas the two groups had a much narrower view, Manfrediz noted. They had some questions about whether or not they were capturing the entire market because they were only looking at BSA member shipments and then extrapolating out to other players in the market. IDC, on the other hand, looks at everything at a local level and then feeds it up to the region and ultimately worldwide.

“We do a more market-based approach so we are collecting information in the market from all the vendors that are playing out in that particular universe that you are talking about. In this case it’s PC software,” he added. “Previously it was more of a member driven methodology, only the BSA members were really providing input into the model to generate the rate.”

Because of the new formula, Manfrediz said it is impossible to compare Canada’s current privacy rate of 35 per cent with the rates printed in previous studies. He did note, however, that judging by survey data that IDC is currently studying, “It does suggest that piracy worldwide is slightly worse than it was in the last year, but we are not quantifying that.”

According to the study, software piracy in Canada is responsible for $990 million in lost retail sales of software, which is only a fraction of the $39 billion lost globally in 2003.

The report also indicated that Canada’s software piracy rate of 35 per cent is only one percentage point lower than the worldwide piracy rate of 36 per cent.

In dollars and cents, Western Europe’s economy was hardest hit by software piracy with losses of almost $13 billion, while Middle Eastern and African countries were affected the least with losses upwards of $1 billion, according to the study.

Factors including income levels, cultural norms, the amount of enforcement or the existence of any sort of legislation or law governing piracy all have an impact on the amount of piracy any particular region may see, Manfrediz explained. Because of issues like these, Manfrediz said that if he had to guess, he would think that in many markets around the world, software piracy will rise over the next few years.

Given Canada’s close proximity to the U.S. and the fact that it’s a developed market, the high piracy rate is probably just of an issue of needing tighter enforcement, more education or some more well-publicized cases regarding enforcement, Manfrediz explained.

“I think with Canada the opportunity is there for [the piracy rate] to go down,” he added. “I just think it depends on what happens in that given year and whether anti-piracy and intellectual property kind of discussions come a little bit more to the fore than maybe they have been in previous years.”

In June of this year, Canadian companies were witness to software privacy laws in action when three Ontario-based companies settled with CAAST and BSA, agreeing to pay a combined total of more than $88,000 in damages.

The companies, which had agreed to settle, were Napanee, Ont.-based G.T. Machining, Whitby, Ont.-based Promotional Products Fulfillment and Distribution Ltd. and Tai Pan Vacation Inc. in Toronto. In all three cases the companies were using more software than they had licenses to support.

North American enterprises are actually getting better at keeping track of their software and software licenses, although compliance is definitely still an issue, according to Laura DiDio, a senior analyst with the Yankee Group.

“It’s not where it should be,” she noted. In fact, DiDio said 90 per cent of all organizations have some issues with non-compliance. Of that 90 per cent, there is a solid 40 to 45 per cent that have some significant non-compliance issues. “Only a very small per cent of the 90 per cent, non-compliant customers are willfully not compliant,” she said.

However, the BSA takes the stance that ignorance is not an excuse, “and to that degree they are right. It’s like telling a cop, ‘Oh, I didn’t see the red light.'”